News Highlights:
- Telcos defended the tariff hike, emphasizing that it was necessary due to rising economic pressures.
- Operators assured that the tariff adjustment would enable telecom operators to enhance service quality, optimize networks, and attract more investments.
Engr. Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), has defended the recent 50% increase in telecom tariffs, stating that it was a necessary adjustment to sustain the industry in the face of rising economic challenges.
Speaking during an interview on Arise TV’s Global Business Report on Tuesday morning, Adebayo emphasized that the increase was not arbitrary but was based on economic indicators and cost factors presented to the regulator.
According to Adebayo, telecom operators have faced significant economic pressures, including rising costs of diesel, energy, and inflation, without a tariff review for 12 years, and explained that the industry had reached a point where the current rates were unsustainable, prompting operators to seek a price adjustment.
He said the regulatory authorities, after reviewing the economic indices, approved the 50% tariff hike, and dismissed allegations that the increase was unconstitutional, asserting that the process followed due regulatory procedures and was in line with the provisions of the Communications Act.
“So if someone is coming to say it is arbitrary, I don’t know the base on which they are saying that this is unconstitutional. I don’t know how that’s come about, because we haven’t done anything against the provisions of the Communications Act, three, we followed all processes and procedures laid down to seek authority review,” he said.
Responding to comments from the Minister of Finance, who described the 50% increase as a starting point, Adebayo reiterated that the government does not control telecom prices but moderates price ranges based on market forces, stressing that telecom operators had requested the review in response to current market realities, and if these dynamics change in the future, a fresh review might be necessary.
“So if it’s 50% in 2025, it is a start. What we have requested is based on current market indicators. There are indices of price. There are indices that determine the price and cost of providing services, and our request at this time is based on the dynamics of current market forces. If those dynamics change tomorrow, we are going to have a different conversation.
“What we have said is that in 12 years, we haven’t had a review of our prices. In the last two years, all other costs have gone up. Cost of diesel has gone up. Cost of energy has gone up, even domestic items have gone up because of inflation. And we came to a point where the rate we were charging was no longer sustainable. We had to approach government to say, if something is not done about allowing us to charge market reflective tariff, the industry might collapse and to salvage that, government has basically granted 50%,” Adebayo said.
Following the tariff adjustment, telecom operators are expected to enhance service quality. Adebayo, however, acknowledged that the prolonged delay in price reviews had negatively impacted network infrastructure, but assured that steps were now being taken to optimize networks, upgrade systems, and improve service delivery.
He disclosed that operators had struggled to attract investments over the past two years but expressed optimism that with the price review, the sector would become more viable for investors.
Addressing concerns about quality of service, Adebayo highlighted the impact of foreign exchange instability on the industry. “Many telecom contracts were signed at previous exchange rates, yet operators must now fulfill obligations at higher rates, further straining finances.”
He called for stability in the forex market to support industry growth. Additionally, he noted that smaller telecom players, burdened by high debt profiles, had been particularly vulnerable to the economic downturn, making network optimization crucial.
Adebayo urged the public to recognize that rising costs are a global economic reality and not unique to the telecom industry, and underscored the critical role of telecom services in supporting other sectors such as banking, commerce, health, and education, stressing that a strong telecom sector is essential for economic stability.
He assured that telecom operators are committed to improving services and attracting more investments, leading to job creation and better overall service quality. “The industry is now in a stronger position than in previous years. With increased investments and improved infrastructure, we are confident that the telecom sector would continue to drive economic growth and provide better services to Nigerians.”